Which ‘e’ word are General Managers accountable for?
Danni was General Manager Operations in a 1400-person organisation with about 600 people under her umbrella. The new Board had made it clear they required a renewed focussed on ‘efficiency and effectiveness’.
“So which one do you hold your Senior Managers accountable for?” I asked. “Efficiency or effectiveness?”
“Well both!” she answered. “It’s not enough that they just do things right, they need to make sure they are doing the right things”.
“And who decides what the right things are?”
“What do you mean?” Danni asked, her brow furrowing.
“Well….let say one of your Senior Managers asks to invest $150k in improvement consultants for a six month project that will deliver a three-year payback of $1.5 million.”
“Sounds good to me. Approved!” she smiled.
“Hang on a tick….what if the service that is being improved is one that we would call, using Drucker’s words, ‘yesterday’s breadwinner’.”
“Well, $1.35 million over three years sounds pretty good”. Danni was fast with numbers.
“True” I agreed. “But what if those improvements required most of the people who are involved in that series of projects you were telling me about to find tomorrow’s breadwinners?”
“Well….that would be a genuine strategic decision. Classic resource allocation. What’s savings of $500k each year compared to the value of new products?”
“Would you let your Senior Managers make this decision?” I asked.
“Nope. I’d get their inputs, hear their disagreements. But the final call – that’s what I’m paid for.”
“And which ‘e’ word are we talking about now”.
“Effectiveness” said Danni with a confident nod. “General Managers make decisions about what are the right things to do.”
“Which means….”
Danni had it: “Senior Managers make decisions that make sure we do it right”.